WTI back in the red below $ 53 amid China growth concerns

After having settled 1.5% higher on Friday, oil futures on NYMEX returned to the red zone and reversed more-than half of the previous rally, as China growth concerns re-emerged after the Chinese Premier Li said over the weekend that China aims to expand its economy by around 6.5% in 2017, as compared to 6.7% growth seen last year. China is the world’s second largest oil consumer, behind the US.

Additionally, markets remain uncertain whether Russia will adhere strictly with the OPEC oil output cut deal, and hence, prefer to stay short on the black gold. Also, increased odds of a Fed rate hike next week keep the sentiment around the greenback underpinned somewhat, weighing negatively on the USD-sensitive oil. A stronger US dollar makes the dollar denominated oil more expensive for holders in foreign currencies and vice-versa.

Markets now await the weekly crude inventories report from the US due out on Tuesday and Wednesday for fresh direction on oil.

WTI technical levels        

A break above $ 53.59/64 (20 & 10-DMA) could yield a test of $ 54.30 (intermittent tops), beyond which $ 55 (zero figure) could be tested. While a breach of support at $ 52.56 (3-week lows) would expose the 100-DMA support of $ 51.31, below which downside opens up for a test of $ 50 mark – key psychological support.